As retailers accept the end of in-store shopping as we know it and start adjusting to e-commerce, an improved and more involved customer experience will be imperative for an e-retailer to grow, let alone stay afloat.
Jane recently announced a strategic partnership that combines Jane’s best-in-class product catalog and business tools with Leafly’s consumer marketplace and reach. Together, the companies will build solutions that empower cannabis retailers with fast and simple online shopping experiences that increase consumer purchase behavior. The partnership will seek to help instill consumer trust in the online shopping experience, build stronger customer acquisition tools for retailers, and help dispensaries grow their ecommerce capabilities with consistency and automation.
This strategic partnership comes after a massive year of growth for both Jane and Leafly. In the past year, Jane powered over 17 million orders and $2 billion in cannabis sales, while Leafly has seen more than 4,500 cannabis retailers in North America leverage their platform to bring new customers through the door.
We spoke with Socrates Rosenfeld, CEO of Jane to learn more about e-commerce and online marketplaces and how Jane and Leafly came together as partners, rather than competitors. Prior to Jane, Socrates was an Apache helicopter pilot for the US Army later transitioning to consulting with McKinsey.
Aaron Green: Socrates, thanks for taking the time today. What trends are you seeing and following in the industry?
Socrates Rosenfeld: Always happy to chat about the industry. Thanks for having me.
If you were to ask me that question a year ago, I’d say having a digital footprint was something that would give a dispensary or a brand a nice advantage. Today, it’s a must-have for survival. Where it used to be one or the other; online or offline, now we are able to merge the two by replicating a physical store into a digitized form to extend its reach far beyond its walls.
As things become more digitized, information becomes more necessary to run operations. With that we are able to meet the expectations of the consumers who are accustomed to convenience and curation. The omnichannel experience provides the best of both worlds. Access and ease of search with the ability to pick up or have the product delivered the same day from a locally owned and run business.
Reviews are one of the most important aspects of this unification of online and offline. It is something that is lost in solely offline purchases, that we’re now able to collect and organize. This product information allows us to provide customers the purchasing power to make a well-informed decision.
At Jane, we believe it is possible to create wins for the dispensaries, brands and customers – and digitization creates the opportunity for that to happen. I think there’s no better incubator in the world than the cannabis industry to prove that online and offline retail can work in harmony.
Aaron: Jane is the largest e-commerce platform in North American cannabis and Leafly is the largest marketplace in North American cannabis. What’s the difference between an e-commerce platform and a marketplace?
Socrates: Great question. There is definitely some overlap between the two, which is why it makes so much sense for us to collaborate. Ultimately though, our focus and expertise are different. Jane’s ecommerce platform serves as the industry’s digital infrastructure that pushes digital products across various order origination points like a dispensary’s own website, a brand’s own website and now, Leafly’s marketplace. Paired with Leafly’s industry-leading content and market information, together we can complete the entire online cannabis shopping experience – from product discovery through order fulfillment.
Aaron: At first glance, one might think that Jane and Leafly are competitors. How did you see it differently? And how did this partnership come about?
Socrates: Not only is our tech complementary, but we are aligned on mission – to empower consumers, dispensaries and brands with the integrity of the plant in mind.
We want to make it simple for consumers to reach the products that will be most helpful for them. We want to make it possible for dispensaries and brands, regardless of their size, to be able to compete on an even playing field.
It all comes back to being good stewards of the industry. Education and access create a healthy demand for a diverse range of products. That means that the plant stays in the hands of many – safeguarding it from homogenization.
Aaron: How do consumers benefit from the partnership?
Socrates: It really is all about bringing this industry in line with any other retail vertical and meeting the customer where they are. It unlocks more avenues for customers to discover products and access a vast catalog of information and verified customer reviews. Bottom line, this partnership makes shopping for cannabis as simple as shopping online for everything else in the world, while also ensuring the success of the sellers.
Aaron: When you say the sellers, are you talking about the dispensary or the brands?
Socrates: Both, we want to provide value for the entire ecosystem. We can do that directly for dispensaries and brands by enabling an automated ecommerce platform that they can use to power their own website. At Jane, we know that technology can unlock value for everyone, where it is not a zero-sum game and success for one means success for the other. With Jane, both the dispensaries and the brands win.
Aaron: What kind of regulatory challenges do you face through the partnership?
Socrates: There are no real regulatory challenges for the partnership itself. The entire industry operates under regulatory challenges, but it is those regulations that have been the catalyst for innovation. I see the opportunity for legal online payments and national product distribution to play a large role in shaping the industry soon, and a partnership like this will ensure a seamless transition for the industry as things continue to evolve.
Aaron: Final question. What are you personally interested in learning more about?
Socrates: I’ve always been curious about disruptive models. The companies, not just in tech, but any company that has set out to do things differently and has been able to hold true to a vision. That’s what interests me, and I think I will always have something to learn and draw inspiration from.
Aaron: Excellent, that’s the end of the interview, Socrates!
Flower continues to be the dominant product category in US cannabis sales. In this “Flower-Side Chats” series of articles, Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.
Maggie’s Farm is an integrated cannabis company based in Southern Colorado. Maggie’s Farm has seven adult-use and medical dispensaries and cultivates the vast majority of their flower on outdoor farms. All Maggie’s Farm products are sun-grown from seed in soil that is 100% custom-mixed onsite as well as spring-watered, slow-cured and hand-trimmed. Maggie’s Farm does not use any synthetic pesticides or growth hormones in its cultivation. In addition, for the past eight years, Maggie’s Farm has recently obtained Clean Green Certified®, a designation certifying organic standards and testing that mirrors the USDA organic certification. Maggie’s Farm was the first cultivator in Colorado to earn the Clean Green certification.
We spoke with Bill Conkling, Founder and CEO of Maggie’s Farm to learn more about the benefits of outdoor growing, localism and their Clean Green certification. Bill started Maggie’s Farm in 2010 after growing up on cattle ranches and farms in Colorado.
Aaron Green: Bill, thanks for taking the time today. Tell me a bit about how you got involved in the cannabis industry.
Bill Conkling: I am a native of southern Colorado. I was a medical caregiver back in the early days of legalization, and I saw an opportunity to vertically align after my first legal crop in 2010. I opened up the store in 2011. I’ve been a lifelong proponent of medical, recreational and adult use of marijuana.
I come from a background of farmers and I had worked on cattle ranches and farms throughout childhood. As soon as I graduated from college, I went back to work on a large cattle ranch in the four corners area [of southern Colorado]. That’s where I started to incorporate my indoor cultivation experience and skills with outdoor.
Aaron: What trends are you following in the cannabis industry?
Bill: I was one of the first medical operators to support legalization, so I have certainly followed legalization trends. I’ve looked at some other states in our region in terms of growth and legalization.
We’re trying to stay a regional supplier and producer so that we are locally grown. We believe the southwest of Colorado is optimal for outdoor cannabis cultivation.
At Maggie’s Farm, we have followed an organic trend from the beginning and I think that’s becoming more of a trend now. We recently received Clean Green certification to that effect. Our goal is to try to provide the healthiest product at a good value to the market.
I believe that all of the products that are made in the cannabis world come from the flower. Downstream products are only as good as their ingredients. It all starts with the flower. So, we focus on producing a clean, top-shelf quality flower that is produced outdoors.
Aaron: How do you define local?
Bill: Local is staying in the climate that is optimal with the least amount of carbon footprint to the earth. That also means trying to operate so that we’re not moving a lot of product across long distances.
We’re trying to set up farms that are in optimal climates. There is a two or three-state region that I believe is the optimal climate for outdoor marijuana cultivation in our country.
Aaron: What states are those specifically?
Bill: I think Colorado and New Mexico, primarily.
Aaron: What geographies is Maggie’s farm currently in?
Bill: We’re in southern Colorado. We don’t go into the plains of Colorado.
Aaron: So Colorado state only right now?
Bill: Yes. The wet mountain range is one of the mountain ranges that we are in. I’ve also cultivated in the La Plata mountain range.
Aaron: What specifically is it about that region that makes it conducive to cannabis growing?
Bill: I think if you get the right elevation and the right microclimates within those elevations, and you have the number of sunny days that Colorado offers in those areas – the intensity of the sunlight, and the cool nights – all those things are factors that coincide in these areas that we like to cultivate in.
Aaron: We’ve been talking about outdoor growth. Does Maggie’s do any indoor?
Bill: No. We’re essentially an outdoor farm. We do a little bit of breeding and we’ve got starter houses, greenhouses and hoop houses for that purpose. We’ve got one greenhouse that we use for some wholesale, but we are primarily outdoors.
Aaron: How do you go about selecting the genetics or evolving the genetics to meet your local environment, given that you’re growing outdoors?
Bill: A lot of it is honestly through testing and experimentation, historically. You just cultivate and harvest and see how the genetics performed, you know? You test, you take test inputs, you take customer reviews, and blind test results from the team and from the customers and you consider all those facts.
Aaron: Do you produce and use your own seeds or are you purchasing those?
Bill: We have done both. I think I’ve probably created somewhere north of 800 different strains at this point. So, we’ve got a huge seed bank. We do also buy from vendors and experiment with some of those genetics as well.
Aaron: Do you market your seeds in Colorado?“I don’t think that you can get anywhere near the terpene value indoors that you can outdoors.”
Bill: We do not.
Aaron: How did you settle on outdoor-only as the strategy for Maggie’s?
Bill: I believe outdoor is a premium flower. I think it has less impact on the earth. I think that there is a lot less pest mitigation than there is indoors, which makes it a healthier, cleaner product. You don’t have to mitigate the concentration of pests that you get in temperate climates of stagnant corners of greenhouses and buildings that you cultivate indoors. Therefore, you never get into the situations as often or as intensely, where you might have to really work hard at mitigating your pests. You can use the natural predator insects you can introduce and oftentimes they survive and they create their own climates and it’s a more natural, healthier product.
I don’t think that you can get anywhere near the terpene value indoors that you can outdoors. You just don’t have the value of the sun, which nothing compares to. You can hold up as many high wattage bulbs as you want and you don’t even pale to the sun and the effect that the sun has on the flower.
Aaron: What are some of the challenges of growing outdoors that you see frequently?
Bill: You have to be nimble. You can’t rely completely on a schedule. You’ve got to be able to shift around in your planting days and your harvest dates.
You’ve obviously got to be on your toes all the time for weather changes. Higher humidity years can tend to bring more insects or pests. Some years you’ve got higher winds than other years. This year, we had a snowstorm on September 9, which left nine inches of heavy wet snow on one of our farms. So, you’ve got to be nimble, very proactive and ready for those kinds of weather events that happen in very short notice.
Aaron: We mentioned Clean Green Certified® briefly. Can you explain more about the Clean Green certification and why that’s an important thing for you at Maggie’s?
Bill: The choice to become Clean Green Certified® was really an effort to validate the organic process that we have. We vetted out what we believe was and still is the premier, organic criteria certification endorsement in the market for cannabis. To this day, they really do an ethical, vetting-out process whereby if you fail the parts of any of the soils that are sent to federal-licensed labs, you do not get your endorsement. The owner of Clean Green also had a mother company that was an endorser of other agricultural products such as coffee, wheat and dairy.
Aaron: How would you compare Clean Green Certified® to USDA Organic?
Bill: Identical. When the federal government legalizes, we are poised to automatically convert to a USDA Organic certification and endorsement. The processes the founder and owner of Clean Green uses to test cannabis is the same process used to test other agricultural industries. For plants, he takes random samples of soils throughout a cultivation field and sends them to a federal-licensed lab where they test for impurities.
Aaron: Did you decide to get your Clean Green certification due to pulling from the market, or is this more something you decided to do internally as Maggie’s Farm?
Bill: I decided to do this internally. I wanted to be recognized for all of our organic efforts and I wanted to let people know that we have a safe product that doesn’t have synthetics in it. Even to this day, a lot of people in Colorado unlike the coastal states like maybe California are still pretty unaware of a Clean Green certification or even the fact that there is an organic process for cannabis or marijuana. So, it’s really just to let our customers know that there is value in a safe, healthy choice for them.
Aaron: What kind of products do you create at Maggie’s farm?
Bill: We grow flower. We are also a big producer of a very high-quality pre-roll. We are developing promoted products as well.
Aaron: Do you do fresh frozen?
Bill: We do some, yes.
Aaron: Are you selling direct to the dispensary or to manufacturers?
Bill: We finally had produced some excess. So, we started wholesaling flower this year and lots of high-quality shake for concentrates to concentrate makers. Our customer is typically a little more of a mature customer. I don’t want to say necessarily older, but I think we probably do hit a little bit of a higher, more experienced, health-conscious, connoisseur customer.
Aaron: Can you give me an idea of some of the regulatory challenges in Colorado that you’ve faced in the past or are facing today?
Bill: The perpetual change of regulation has been a challenge. Being a competent operator in cannabis means getting used to the change and having the resources to be nimble with compliance. We haven’t had common problems such as metals, mold or mildew issues. However, we have had some hardware issues, which required us to change cameras along with other technical intricacies.
Aaron: How many acres do you have?
Bill: We have about 30 acres of secured premise cultivation.
Aaron: Is that all managed in-house or sublet?
Bill: It’s all managed and operated exclusively by Maggie’s Farm.
Aaron: What’s next for Maggie’s Farm? What are you excited about?
Bill: We want to continue to put a higher scale of a very healthy, quality, value flower out there and to be able to offer that to more states initially states that are within our region and eventually states across the US. Also, we will continue to do our best to meet the growing demand for healthier choices in general.
Aaron: Lastly, what are you personally interested in learning more about?
Bill: How we can continue to be as earth-conscious as we can be? How we can continue to look for ways to give back to our communities? How we can continue to operate as a view of made in the USA and to try to just support local regional and national products and vendors? Just how to be more aware and always look for opportunities for self-improvement.
Aaron: That concludes the interview, thank you Bill!
Flower continues to be the dominant product category in US cannabis sales. In this “Flower-Side Chats” series of articles Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.
Connected is a vertically-integrated cannabis company based out of Sacramento, CA and one of the most sought-after brands in California and Arizona. Having formed as a legacy operation in 2009, Connected has created a cult-like following over more than a decade in business. According to BDS Analytics, Connected Cannabis and their acquired brand Alien Labs now boasts the highest wholesale flower price in any major legal market – their average indoor flower wholesale price is 2x the CA average – yet also has the highest flower retail revenue.
We spoke with Sam Ghods, CEO of Connected to learn more about his transition from tech to cannabis, how Connected thinks about product and his vision for future growth. Sam joined Connected in 2018 after getting to know the founders. Prior to Connected, Sam was a co-founder at Box where he stayed on for 3 years after their successful IPO.
Aaron Green: How did you get involved in the cannabis industry?
Sam Ghods: I originally came from the tech industry. I co-founded Box, a cloud sharing and storage company, in the mid 2000s with three other friends. We grew that from the four of us to eventually a multi-billion-dollar public offering in 2015. I stayed on a few more years after that until I took some time off trying to decide what I wanted to do next. I looked at a number of different industries and companies, but personally I always had a real passion for artisan and craft consumer goods. It’s a really big hobby of mine. Whether it’s going to Napa or learning about different kinds of premium consumer goods, I really had a deep love and never knew cannabis could be like that.
When I first met Caleb, the co-founder of Connected, he instantly got my attention by telling me that they had been selling out of their product in the volume of millions of dollars a year at more than two times what everybody else was selling for. That really piqued my interest because creating a product that has that level of consumer passion and demand is maybe the single hardest thing about building a consumer goods business. For them to have been so successful in what was a very difficult and gray market to operate in at the time – this was mid 2018 that I was speaking with him and he had been building this company since 2009 – is a really big challenge, and really impressive.
So, I started spending time with Caleb and the Connected team and learned a lot about the business. Everything I learned got me more interested and more excited. The way that they thought about the product, the way they treated it was with a reverence and level of sophistication I had no idea was possible.
I was so excited to just learn about the space. I mean, honestly, it feels like the internet in the 90’s- The sheer possibility and excitement. The only difference here is that the market already has existed for 100 years plus: the gray and underground markets for this product are actually phenomenally mature. And now we’re lifting up billions of dollars in commerce that’s already occurring and attempting to legalize all of it in one fell swoop, which creates such an interesting set of challenges.
I first got involved as an advisor on fundraising and strategy. And then a few months later, they were looking for a CEO and I joined full time as CEO in September 2018.
Aaron: What trends in the industry are you focused on?
Sam: It may seem basic, but I think product quality in the broader cannabis markets nationally and internationally is really underrated. Because of the extreme weight of the regulatory frameworks in so many different markets, it’s resulting in a lot of product being grown and sold just because it can be by the operators that are doing it. In many markets, they count the number of producers by the handful, instead of being measured in hundreds or thousands like in California or Oregon. And in that kind of environment, you’re not really having competition, and you’re not really able to see the quality that has existed in this category for years and years and years.
That’s one of the things that really sets us apart – the quality is first above all else, as well as the innovation and time that has gone into it, and not many existing brands in the legal market can say that. With some of the “premium” brands on the market, it would be comparable to just jumping into the wine industry one day and thinking that you can become a premium brand, without having any knowledge of the history of the product or the industry itself. At Connected, we have a team that’s been doing this for over a decade. We did a back of the envelope calculation: there’s over one thousand lifetime harvests between our team. We’ve also brought in specialists from Big Ag and other industries to complement that experience.
Cannabis is a very, very difficult plant to grow at a very high level. It’s much more like high-end wine or spirits than other fruit or produce. I think in the cannabis community, that’s extremely acknowledged, and appreciation for that is the reason we get by with the highest prices in the legal market. I think in the broader investor and financial community, this point hasn’t really hit home, because the limited license markets aren’t mature enough, and there isn’t enough competition in many of them.
Our focus is continuing to make the best product we can, which has fed and developed our brands [Connected and Alien Labs] into what they are today. That is our number one focus, and we think it’s pretty unique to the space of not just cultivating a great quality product, but also as far as breeding, pushing the bar higher and higher on what can be done with the genetics of the plant.
Aaron: How do you think about choosing testing labs?
Sam: So, the number one criterion is responsibility and compliance. We must be completely confident that they’re testing accurately, safely and exactly to the specifications of the state. Then from there, it is really cultivating about a partnership. There’s a lot of nuance in the relationship with a testing lab. We note things like: Are they responsive? Are they sensitive to our needs in terms of either timelines or requirements we have? It does come down to timelines and costs to a certain extent, like who’s able to deliver the best service for the best cost, but it really is a partnership where you’re working together to deliver a great product. Reliability and consistency are big pieces as well.
Aaron: Industry estimates for illicit market activities are something like 60% of the California market. From your perspective, how do we fix that?
Sam: I think it probably comes down to funding for the efforts to discontinue those activities and opening up the barrier to entry, incentivizing “illegal” operators to make the investment in the cross-over. I think the most successful attempts to tamp it down was when there were initiatives that were well-orchestrated and well-funded, allowing for legacy growers to actually cross over to the “legal” industry. You can’t launch an industry with such an extreme amount of regulation, set a miles-high barrier to entry, and then penalize legacy growers for continuing their business as-is. If the illicit market continues to be fueled by rejection, you’re not going to achieve the tax revenue that you’re expecting to see, that we all want to see. There needs to be an attitude that every dollar put into transitioning illicit markets into regulated markets is returned many times over in tax revenue to the state’s citizens.
Aaron: So, I understand you sell wholesale. Do you sell direct to consumer?“Once they hit the shelves, we blow people away again, beyond their expectations of what they had before.”
Sam: We own and operate three retail stores, so we do sell direct to our consumers, but at this point the majority of our product is sold through third party dispensaries.
Aaron: Do you make fresh frozen?
Sam: We do. On the cultivation side we have indoor, mixed light and outdoor. We fresh freeze a portion of our outdoor harvest every year, and then we use that fresh frozen for our live resin products, for example, our recent live resin cartridge. It creates a vape experience really unlike any other because we are using our regular market-ready flower, but instead we’re taking that flower and actually extracting, not just using the distillate and mixing a batch of terpenes with it. We extract the entire plant’s content across the board, from cannabinoids to terpenoids and everything in between, and then you have our live resin cartridges.
Aaron: How do you think about brand identity and leveraging the brand to command higher prices?
Sam: The cycle we’ve effectively created is that every time we do a release of a new strain or a new batch or harvest, the quality is generally going up. That quality is released under our brands, and then the customer is able to associate that increase in quality and reputation with those brands. Then for our next launch, we have an even bigger platform to talk about the products and to ship and distribute and sell the products. Once they hit the shelves, we blow people away again, beyond their expectations of what they had before. That continuous cycle keeps fortifying the brand and fortifying the product. From our perspective the brand is built 100% on the quality of the product. The product will always be our highest priority and the brand will come downstream from that.
Aaron: Tell me about Alien Labs.
Sam: Alien Labs was an acquisition. It was a company that had built their brand really successfully in the gray market through 2017 and Prop 215 in California and had an incredible level of quality, a really loyal and dedicated fan base, not to mention a tremendous Instagram presence and following, which is where 98% of cannabis marketing happens today. We really loved the spirit of what the founders were bringing to the table. In 2018, we decided basically to join forces with them and bring them on board, creating a partnership where they leverage our infrastructure and the systems and processes we’ve built, but still keep their way of cultivation and their product vision. To this day, Ted Lidie, one of the founders, continues as the lead brand director for Alien Labs.
Aaron: In what geographies do you currently operate?
Sam: Our primary offices and facilities are based out of Sacramento, California, but we have facilities throughout the state. Last year, for the first time we launched operations in a new state, Arizona. As you may know, you’re not allowed to take cannabis products across state lines at all, so if you want consistent product in multiple markets you really have no choice but to rebuild your entire infrastructure in each state you want to open up.
There are many brands that are expanding and launching in more markets more quickly, but they’re doing so by taking product that’s already existing and putting their brand name on it. That is something we’ve decided strategically that we will not do. We’ve spent years building a high level of trust with our customers, so we’re only going to put our brand name on products that are our genetics, our cultivation, our style, our quality of product. When we launched in Arizona, we did it with a facility that we leased and took over and now operate with our staff. We’re replicating the same exact product that you can get in California in Arizona, which is really exciting.
We launched just this past November, which has been incredibly successful. Our dispensary partner Harvest saw lines of dozens of people out the door.“We consider ourselves a flower company first and foremost, so for us, that was a very calculated strategic move.”
Aaron: Any new geographies on the horizon that you can talk about?
Sam: We’re constantly evaluating new opportunities. I don’t have anything particularly specific to announce right now, but I will say we look for states where we believe there’s a competitive environment where the product quality is going to really stand out and be appreciated.
Aaron: Do you notice any differences in consumer trends between California and Arizona that stand out?
Sam: Not too many yet. We don’t have a retail location in Arizona, so we don’t have as much direct contact. However, we have heard consistently that the Connected customer demographics – as you would imagine most interested in our product – are those looking for something special, unique, different and have a really superior quality to everything else out there. We ended up launching in Arizona with the highest price point for flower in the state, and we say that’s just the beginning. The market is still so young and immature, both nationally and internationally, that this category is going to develop into one that’s really taste-driven.
Aaron: What’s next in California?
Sam: Continued growth and product development. We want to keep blowing away our customers with more and more incredible products, different product types and categories. For example, the cartridges were a really big launch for us because we don’t really consider ourselves a vape company. We consider ourselves a flower company first and foremost, so for us, that was a very calculated strategic move. We were only going to launch the product if we could fully replicate what the consumer gets from the flower experience. We are very unlikely to ever release a distillate pen, for example.
Aaron: What are you personally interested in learning more about?
Sam: We, as a society, really don’t know very much about the cannabis plant. Pretty much all meaningful research around cannabis stopped in the early 1900’s with prohibition. In the meantime, we’ve performed millions of dollars of studies and research on almost every other plant that we grow commercially. We understand these plants extraordinarily well. Cannabis science is stuck back in agriculture of early 1900s. The most interesting conversations I have are around how the plant works, how it doesn’t work and the ways in which it is so different from all other plants with which we are familiar. Our head of cultivation comes from Driscolls, the largest berry company in the world, and even he is frequently surprised by the way the cannabis plant reacts to things that are commonly understood in other plants. So, the way the actual plant responds to different environments is truly fascinating and something I think we’ll be learning about for decades and decades to come.
Aaron: Okay, great. That concludes the interview. Thank you, Sam!
More and more we are seeing the development of proprietary hardware platforms in cannabis. With proprietary technology in hand, manufacturers often lean on MSOs, LPs and other brand partners to grow their business through existing sales channels.
We spoke with Mike McDonald, President and CEO at Ammonite, to learn more about the history of the Dablicator™ platform and Ammonite’s North American brand partner strategy. Mike formed Ammonite as a spin-off company from Jetty Extracts after getting to know the founders in a real estate transaction. Prior to Ammonite, Mike was an operator in the manufacturing and product development space, having helped to launch the Giant bicycle brand as well as growing and eventually selling the Atlas Snowshoe Company to K2 Sports.
Aaron: How did you get involved in cannabis?
Mike: Well, like a lot of folks in the industry, my background is pretty eclectic. I come primarily from an operator’s perspective – I’ve been in manufacturing, product development and company growth for my whole career. I lived in Taiwan for several years and helped to launch the Giant bicycle brand worldwide. I was also involved with a ski business that was started at Stanford as a thesis project called Atlas Snowshoe Company. Fast-forward, we built it into the largest snowshoe brand and activity in the US and later sold it to K2 Sports. So, I’ve always been involved in the growth of product-related businesses.
I’ve also done some real estate development as well; I actually sold our building to the Jetty guys, which is how we met. In that process, I got involved with their company, helped Jetty reorganize its business model, raise some money, and then just got addicted to the whole industry and really found it fascinating. I liked the team at Jetty and couldn’t resist jumping in, and now I’ve been full-time in the business for over three years.
Aaron: How did you get involved in Ammonite?
Mike: Ammonite is actually a spin out company from Jetty Extracts, which is one of the largest brands in California. Our main Ammonite product is called the Dablicator™ Oil Applicator, which was originally invented at Jetty as a medical device for cancer patients. We saw a big demand for it as a private label partnership product, so we decided to spin out a separate hardware company and really focus on developing unique IP and CBD and cannabis related hardware.
Aaron: What trends are you following in the industry?
Mike: Certainly the MSOs of the world are really expanding and the top three to five are making a mark with growth and more sophistication in the market. I think the social equity movement is really a big component that we’re all excited about in the industry. You’re seeing the larger players really put their money where their mouth is around that. We’ve always been a big part of that in California.
Specifically, regarding trends in the cannabis space, Colorado and California are probably the two most mature markets. We generally say what’s happening in California and Colorado eventually make their way out to the rest of the world. Vaping was invented in California and Colorado, and now it’s a huge part of the business where before, four or five years ago, the market was mostly flower-centric.
There’s a trend away from inhalables, with more awareness around lung-related illnesses and of course COVID, so we’re seeing a big growth in edibles, drinks and so forth. Interestingly enough, although it’s an inhalable, infused pre-rolls are a big growth sector as well. Jetty is actually launching an infused pre-roll program in February.
Folks are looking for ways to get their medicine without smoking – and this has definitely led to a growth in the oil application business. Oil application has traditionally been delivered via a syringe. Dablicator™ oil applicator is essentially an improved, more convenient syringe. On the medical side, patients have been taking oil sublingually, putting it in food and drink and so forth for years because a lot of them can’t smoke. As that trend transfers over to the adult use market, oil application is becoming really big. You can take it sublingually; you can put it in your food or beverage. On the recreational side, you can add it to your loose flower or joints, or of course, dab it directly onto your rig via the heat resistant tip.
Further, you’re probably familiar with a lot of these portable dab rigs that are taking off, like the G Pen Roam and the Puffco Peak and a variety of others. So now you can dab on the go with your standard wax and shatter in a jar. It’s just not the most convenient way if you’re up on a hike or on a mountain bike ride. So now, with a portable dab rig and something like the Dablicator™ oil applicator, you can have a really convenient mess-free way to enjoy cannabis. The big growth in concentrates and areas that aren’t necessarily inhalables is where our product hardware really fits in.
Aaron: How did you come up with the idea for the Dablicator?
Mike: The Jetty team had a friend that had brain cancer. He was doing a lot of chemotherapy and was having trouble eating and keeping weight on and he couldn’t smoke. So, the guys at Jetty began to bring him cannabis oil, which he was able to use ingesting it from a spoon initially and it really helped him with his pain, his anxiety and his appetite. In that process, we realized that there wasn’t really a great way to deliver oil. Syringes were there, but they were kind of sketchy and they weren’t convenient.
So, the Jetty team developed a better mousetrap. Several iterations later, this Dablicator™ product was ready for patients. In fact, it became a big part of the Jetty Shelter Project, a non-profit where the team delivers cannabis to cancer patients, and it was a very much sought-after product delivery device in that world. So, it was developed inside of a need on the medical side and it’s really sort of grown inside the expansion on the adult-use side.
Aaron: Can you explain how the Dablicator™ oil applicator works from a perspective of form and function?
Mike: Pre-Dablicator™ you would use a syringe type product – for direct oil application, sublingual application, or as an add on to your flower. The difference between Dablicator™ oil applicator and a traditional syringe is that Dablicator™ is a twist and plunge product. Imagine a pen filled with oil, but instead of inhaling it, you’re able to dispense it through a tip that is heat resistant, which means you can apply directly to your dab rig nail. You’re able to put it in your pocket without fear of cannabis oil leakage. It’s discreet, precise, compact and portable.
Aaron: How does the user dose using Dablicator™ oil applicator?
Mike: Basically, there’s measurements on the plunger of 55 milligrams apiece – one click is 55 milligrams, and you can dispense as many clicks as you like. What’s cool about the product itself is if you’ve clicked too many times accidentally, you can back it off and the excess oil won’t dispense. You can go to dablicator.com and see demo videos as well.
Aaron: Dablicator™ oil applicator started as a Jetty Extracts spin-off. I see you are now white labeling for other oil brands. How do you go about selecting your partners?
Mike: We call it our brand partner program. It’s not too dissimilar to what other hardware manufacturers, like PAX and GPen, are doing. We’ve got a patented and innovative device where our brand partners, MSOs and leading brands throughout the US and Canada, can take their existing vape and tincture oils and offer them in Dablicator™ oil applicator hardware.
Our focus is signing up major, well respected brands and MSOs on to the “platform,” meaning they are able to immediately offer between six and ten new SKUs to their consumers. They take their existing oils, put them into a custom branded Dablicator™ hardware unit and add their custom branded packaging. It’s a full turnkey solution. For example, one of our partners, 710 Labs, is developing their RSO and were shopping for a delivery method specifically geared towards medical patients. Within eight weeks, we had a custom program for them and delivered hardware, and we assisted on the packaging front as well.
Our partners have to be reputable folks that are interested in developing or delivering oil in a unique and innovative way. Frankly, our early partners are those that see where the growth is. 710 Labs is on the platform, as well as Surterra in Florida, Ancient Roots in Ohio, and we’ve got multiple conversations going to some of the other MOSs and the LPs in Canada.
Aaron: Are the brand partners loading the oil applicator themselves?
Mike: We customize the product for them and then ship them unassembled and empty. In their lab, they use the same machinery and equipment they use to fill their vape cartridges. They then fill their Dablicator™, assemble it, package it and ship it out just like any other product that they’re processing and manufacturing.
Aaron: What kind of oils are suitable for Dablicator™?
Mike: Pretty much any oil that’s going into a vape cart is suitable and then some. Some of our customers, including Jetty, started out with a THC distillate. Live resin is becoming a big product category in California as well as solventless oils. Dablicator™ oil applicator can accommodate everything from distillate to live resin to solventless to RSO and even full spectrum CBD. If it can flow, if it doesn’t crystallize up like shatter and sugars and diamonds, you can put it into Dablicator™, even the thickest of oils. It’s designed to contain any kind of liquids that are flammable.
Aaron: What geographies are you currently in?
Mike: We’re in multiple states throughout the US and actually just signed up with an LP in Canada. We only launched the program in August of 2020, and today we’ve got partners California, Colorado, Ohio, Arizona, Missouri, Florida, soon to be Michigan, Illinois, and throughout Canada.
Aaron: Any plans for international expansion beyond North America?
Mike: We’re getting inquiries on a regular basis from all over the place, including internationally. We’re in conversations with some folks down in Brazil. Spain is actually a big cannabis market and we’re having some conversations with some folks there. The inquiries are coming in faster than we can process the relationships, but right now our major focus is on North America.
Aaron: What are your goals with Ammonite?
Mike: We are developing a category, right? So today, oil dispensing isn’t top of mind. Today, if you want oil, you go into a dispensary and say, “Hey, give me those syringes.” My goal is that a year from now, you can walk into Harborside in Oakland and you see a wall of different branded Dablicator™ oil applicators. The goal is to really turn the oil dispensing business into a category, and then position Dablicator™ oil applicator as the best and leading product in that category.
Aaron: What are you personally interested in learning more about?
Mike: Well, I’ve got two teenagers – two daughters, as a matter of fact, a freshman and a senior – and they’re being homeschooled right now. So that’s been quite an interesting development!
I think on the cannabis side, it’s just fascinating what it is as a business model. It’s the most recent multi-billion-dollar opportunity in consumer products. You only get a chance to participate in something like that maybe once in a lifetime. I’m really looking forward to seeing it become more adopted into the mainstream and it’s already becoming that way from a consumer perspective. I am watching the cannabis market become legal from a federal perspective, hoping that the social equity component of the industry really stays with it.
I’ve been in a lot of businesses over the years; I feel like one of the gray hairs in this business that is actually an operator versus someone who came over from the financial side. I am continuing to learn, grow and work with great people and this has been a really amazing experience for me.
Aaron: Okay, great. Mike, that’s the end of the interview. Thank you for your time today!
Carbon Dioxide (CO2) extraction is a processing technique whereby CO2 is pressurized under carefully controlled temperatures to enable extraction of terpenes, cannabinoids and other plant molecules.
Green Mill Supercritical is a Pittsburgh-based manufacturing and engineering company focused on cannabis and hemp extraction. The company offers a range of CO2 extraction equipment where users can tune and control their extraction methods.
We spoke with Wes Reynolds, CEO of Green Mill Supercritical. Wes recently joined Green Mill as CEO and investor in the company after a long career at the Coca-Cola Company in senior sales and general management roles.
Aaron Green: Wes, thank you for taking the time to chat today. How did you get involved in Green Mill?
Wes Reynolds: I came out of a 20-year career at Coca-Cola, where I lived and worked around the world. I was a sales and general management guy with Coke, and learned a lot about running businesses and how to drive growth. I left Coke in 2017. After that successful career I wanted to be in the cannabis space. I felt like cannabis was a growing space with a lot of opportunity and a lot of misperceptions out there, particularly around the foundations of what I would call the “evil reputation” of cannabis. I just found that abhorrent and wanted to be part of changing it.
So I ran the Florida operations for Surterra, which is now called Parallel, for a year out of Tampa, and we did a great job of growing that business in Florida. As the president of the Florida operation for Surterra, I saw everything seed-to-shelf for the industry. We had a 300,000-square-foot greenhouse in Central Florida, we had dispensaries, we had all the production, distribution and all the marketing. I was really able to learn the industry top to bottom.
When I left Surterra, I started looking at various investment opportunities and thinking about what I might want to do next. I came across Green Mill out of Pittsburgh, and was really impressed with the technology that they had put together. Having run a company where we used CO2 extraction, I had experiences with systems that didn’t work when they were supposed to or didn’t work the way they were promised, which led to lots of downtime, lots of frustration and lots of babysitting. I was impressed with Green Mill’s engineering approach and decided that I’d like to be involved with them. I originally considered just being an investor, but more and more conversations led to a greater understanding of some basic business administrative needs that they had as well. One thing led to another and I agreed to come on as the CEO, and I’m also an investor.
I’m excited about what we’re doing at Green Mill. I think that bar none, we make the best supercritical CO2 extraction equipment out there. We continue to innovate on that every day. We want to push CO2 beyond known limits, which is our stated goal as a company. We believe in CO2 and we’re living our goal in that we really are pushing it beyond known limits. There are new things we’re uncovering every day where we go, “Oh, my God, I didn’t know we can do that with CO2!” So, that’s kind of fun.
Aaron: Can you tell me just a high-level overview of how CO2 extraction works?
Wes: A supercritical CO2 extraction system is a collection of extraction vessels and fractionation vessels or collection vessels. In our case fractionation because we’re doing multiple collections through a single run. Then you need a system of pumps and valves and tubing, etc. to move the solvent in a supercritical state through the packed biomass, and then move the extracted compounds into a set of collection vessels. It sounds very easy. But the key to supercritical CO2 extraction is controlling temperature, flow rate and pressure. The better you can control temperature, flow rate and pressure, the more precise of an outcome you’re going to get. For example, say you run a three-hour extraction run, and you want to run it at 3500 psi. Well, you know, a competitive system might fluctuate 300 to 400 psi on either side of 3500. Whereas our system currently fluctuates more like five to 10 psi on either side of the 3500. So, there is much more control and precision.
Our whole goal, when we’re talking about pushing CO2 beyond known limits, is how do we continue to chase that holy grail of perfect control of temperature, flow rate and pressure? One of our advances so far is a proprietary pump, for example, that’s a liquid displacement pump that we engineer and build. It ensures a very even and consistent flow, independent of the pressure setting. So, that flow rate doesn’t change in our system compared to what you would see with another system. It sounds like a minor thing, except that at the end of a run, if you expected to get a certain set of molecules, you’re going to get a different set of molecules if your temperature and flow rate and pressure are varying, because what you’re doing is disrupting the density of the CO2 as it flows.
It’s about building a system that is precise in that way, I think, that requires enormously skilled engineering effort and design effort on the front end, and then requires us to have advanced production and manufacturing capabilities in our shop in Pittsburgh. Our customers are clearly impressed with the levels of consistency that they’re getting out of their system.
Aaron: You talked about precision and consistency as two items. Is there anything else that makes Green Mill different?
Wes: I’m a brand guy. I believe in brands. I came out of a 20-year Coca-Cola career.
The way that the cannabis industry is going in total, in my opinion, is the consumer is going to get more and more discerning along the way. Up until this point, everybody thinks “oh, we have THC and CBD and we have intensity.” But the more sophisticated and educated consumers get, the more discerning they’re going to be about what products they want to put in their bodies.
What makes Green Mill different is that we’re building a system that allows the operator of that system to create differentiated products for the marketplace. So, it’s not simply “CBD is CBD.” It’s: what plant did you start with? How can you maintain as many of the characteristics of that plant as possible?
We’re going to create the most sophisticated tool possible to allow the operator to create products that can be differentiated in the marketplace for a discerning consumer at a premium price. That way, you can create a market where there might not have been a market before, instead of just “hey, I’ve got X pounds of biomass that I need to extract. Give me your bluntest instrument and let me extract.”
We currently make five different systems. First is the SFE Pro. We make a seven and a half liter and a 10-liter version, with two-vessel configurations of each of those. Then we have what we call a Parallel Pro, which has four 10-liter vessels and two pumps, with two streams running parallel to each other and emptying into shared collectors. It doubles the extraction rate, and you don’t expand the footprint very much. But 10-liter vessels are the biggest vessels we use. Because when you go too large with the vessel, you are giving up something in terms of the ability to control temperature, flow rate and pressure. Your efficiency starts to drop with higher vessel volume.
One of the things that makes Green Mill different is our extraction rate. Our Parallel Pro can do 145 pounds a day of biomass. We think that’s a significant amount, given the demand that’s out there for unique products. What we’re advocating for is multiple extraction systems instead of giant permanent installations of extraction systems, that end up limiting your flexibility. Big systems also prevent you from creating redundancies in your operating system. So, when your extraction system goes down, you’re done. Versus in our universe, we would say, you might want to have three or four extraction systems in different locations, running different products. Our price points are such that that’s very doable.
Aaron: How does the breakdown look between your cannabis and hemp clients?
Wes: A lot of that is legislative frankly. It has to do with what the environment is like at the moment. About 60% of our customers are small hemp farmers. And then we have the other 40% in the cannabis space that are medical or adult use producers.
CO2 extraction has a lot of applications beyond cannabis. We have a couple of customers using our system for hops extraction, for example. We see an enormous opportunity out there for non-cannabis botanical extraction, but our primary focus is cannabis. That is what we’re designing this system to do.
We find that small hemp farmers love our system because it is reliable and very automated. We have proprietary software that operates the whole system. You load and run various “recipes,” at least we call them recipes. What you are doing is setting flow rate, setting temperatures, setting pressures, etc., then that proprietary software has an unbelievable ability to control everything through the process. I’ve talked to several different operators who have used other machines, and then found themselves on a Green Mill system and couldn’t believe how easy, but also feature-rich it was.
I talk about it like it’s like an oven, you know, you set the oven at 375 degrees. And a really good oven stays right at 375. You still need to be a good chef to be able to make that perfect cheesecake. But without that oven, your hands are tied, so you are constantly trying to check those, “is it still 375? I don’t know!” With our system, if it says 375, it holds at 375. So we’re pretty excited about that.
And we’re going to continue to innovate. For example, we have a proprietary heat exchanger that we use on our systems. It’s actually 3D printed stainless steel. It’s about a 20-pound piece of steel that’s been printed to have a special tubing shape in the center only possible with 3D printing that allows us to heat CO₂ very quickly.
Aaron: That’s very cool. I’m noticing a lot actually, the innovations in cannabis are creating these adjacent market opportunities in botanicals. So, I think that’s interesting you point that out. You mentioned terpenes are one of the things you collect out of the CO2 extraction. Can you talk about the crude that comes off and how people are either monetizing or formulating that crude?
Wes: Our goal is to produce the “purest crude” possible. So, we want “less crude” crude. I think that we’re at the beginning of this, Aaron. We’re nowhere near the end, which is what I find so exciting, because all of our innovation, all of our continued development and all of our experimentation is designed to keep thinking, how do we push this further and further and further and get a more refined crude.
We just welcomed Jesse Turner to our team as Director of R&D, who is a well-known extraction guy in the industry. He came from Charlotte’s Web and Willie’s Reserve, and has been doing independent consulting. He’s just a rock star. He’s already off and running on experimenting with different stuff.
I think that we are just at the beginning of seeing more and more of that opportunity to help people realize, “Oh, my gosh, I did not know you could do this!” Terpenes are a good example. I think we are only scratching the surface of what terpenes can do. I mean, a cannabis plant has 400 plus molecules and we know a good bit about probably 10 or 12 of them. So, what are we going to find out about the other 390? And as we do, the Green Mill system will be ideal for separating those molecules that we don’t know today are valuable. So, I think that’s part of what we’re chasing as well.
Aaron: So where do you see CO2 extraction fitting into the cannabis and hemp supply chain?
Wes: For any product on the market that is not a smokable flower it helps to have an extraction process. There may be some products that come out that we don’t know about yet that are not going to qualify in that category. Whether you are talking about vape cartridges, or lozenges, or gummy bears, or whatever it is, they are going to start with extract. I think what consumers want is zero adulteration of their product. So if you take any botanical product, and if it is GMO-free, does not have any pesticides, maybe it is all organic, etc. — there is real consumer appeal to that. Whether you agree with it or not, it is what consumers want.
We believe that we can continue to push CO2 so that there’s no requirement for introduction of any other materials than just CO2, which is a completely inert gas. It’s got no residual effect whatsoever on the product. If we get where we want to go, then eventually you are talking about a pure botanical experience.
Initial upfront capital is higher than you are going to see with ethanol and butane extraction solutions for the same size equipment, but ongoing operating costs of those are much higher, when you weigh it out over a period of time. I think what we are going to find is that people are going to keep coming to CO2 because they realize there are things they can do with it that they can’t do any other way.
The end consumer is really who we want to keep in mind. I think for a long time, this industry was very demand driven. “I have X acres of cannabis product, whether that’s hemp, sativa, indica, whatever it is, and I need to extract this many pounds a day over this period of time.” And we keep asking the question, well, who’s going to buy that product on the other side? What do you want it to look like when you put it out on the market? As opposed to how much raw plant matter do you have? What’s the demand? And that was a difficult conversation. We’re starting to see more people come around to that conversation now. But I think that’s the question we want to keep answering is how do we create those products that are differentiated in the marketplace and that can pass muster in any regulatory environment? People are going to want to know what’s in their product.
Aaron: What trends are you following in the industry?
Wes: As the CEO, I’m particularly interested in the overall development of the landscape of the industry in terms of who’s playing, who’s winning, what’s happening with legislation, MSOs versus SSOs. I’m also interested in the international environment. We have a good bit of interest from multiple countries that have either ordered Green Mill systems or are talking to us about Green Mill systems, including Canada and Latin American countries, some European countries, Australia and New Zealand.“We’re really committed to educational efforts with a very rigorous scientific foundation, but in language that is approachable and people can understand.”
The trends that I’m particularly interested in are more on the business side of the equation, in terms of how this business is going to shake out particularly from a capitalization perspective, as banking laws continue to change, which is a big deal, and the legislative environment gets a little more predictable and a little more consistent.
Aaron: Okay, last question. So what are you personally interested in learning more about?
Wes: Everything, is the short answer! I constantly run this little challenge of trying to understand enough of the science. I’m not a scientist, I’m a sales guy. That was how I grew up: general management and sales. I’ve made my living over many years being wowed by the pros. Depending on the scientists and the very specialized folks to help provide the right answers to things. I’m fascinated by the chemistry and I’m fascinated by the mechanical engineering challenges of what we do at Green Mill. So, I’m always interested in learning about that.
I think there’s a need, and it is helpful to be able to talk about those things in language that the layperson can understand, as opposed to explaining everything in scientific language. I think what I am trying to do is help people put it into a language that they can get, but that is not simple. Language that is correlative to reality. I think there’s so much misunderstanding about how these things work and what’s happening. We’re really committed to educational efforts with a very rigorous scientific foundation, but in language that is approachable and people can understand.
Aaron: Okay, that’s it. Thank you for your time Wes!
Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.
This is the fifth and final article in a series where we interview leaders in the national infused products market. In this final piece, we talk with Lisa McClung, CEO, and Glenn Armstrong, senior advisor at Coda Signature. Lisa got started with Coda in 2019 as a board member after transitioning from an executive role at Wrigley. She now heads up the company as CEO and President. Glenn has deep experience in product development and innovation with brands such as General Mills, Whirlpool and Wrigley.
Aaron Green: Okay, great let’s get started here. So we’ll start with Lisa. How did you get involved at Coda?
Lisa McClung: I was lucky. Based on my experience, I was originally asked to be on the board of Coda. I’ve served on nine company boards in addition to my career as an executive at General Electric and at the Wrigley Company where I was heavily involved with innovation. The Board then asked me to consider stepping in as CEO after I’d been working there for six months. I was just overwhelmingly complimented that they considered me and I feel incredibly lucky to be here.
Aaron:Okay, great. Glenn, how did you get involved in Coda?
Glenn Armstrong: We’ve known each other for a long time at Wrigley. I was in innovation for the confectionery side and worked very closely with Lisa. When she became a board member, she asked me to do some advising for her. I’m new to the cannabis industry so, I was really excited about doing something different. When Lisa became CEO, she asked me if I would help her.
Aaron: How do you think about differentiating in the market?
Glenn: I spent 90% of my career on the innovation side working with companies like General Mills, Quaker Oats and Amway. When I think about how to differentiate almost any company I always focus on innovation. In the cannabis industry, everybody’s got gummies and chocolates but you’ll hear people talking about “gummies are going away.” No, you’ve just got to innovate, right? It’s like the carrot peeler from 20 years ago. It used to sell for about 25 cents, and it was all steel and now they sell for $10.99. Who would have known?
I believe anything can be innovative. When I looked at the gummies I asked, “what we learned at Wrigley, can we bring into Coda that currently is not in this industry?” Think about various gums and how they can change flavors over time like Juicy Fruit which dissipates really quickly and that’s just how the flavor is.
Or, there are other ways like spearmint. You can get an initial boost and then extend that flavor by encapsulations. I don’t see much of that in the cannabis industry. It’s just taking what’s out there from flavor companies that people like and getting them into this market.
Aaron: Awesome. Do you have any particular technologies or work or products from other industries that really interest you?
Glenn: I would say it’s going to be from the pharmaceutical industry. You think about THC and CBD being so hydrophobic. With chocolate, it’s not such a hard thing to get into. If you try to get those kinds of compounds into aqueous solutions though it can be a challenge, the drug industry has been doing it for years! So, to me, delving into some of their patents and some of their ideas, that’s one of the most powerful industries I see where we could utilize their technologies to advance the industry. I expect big pharma to get into this. We can start looking at what they’re doing that we can leverage quickly to get into Coda products.
Lisa: We’re not necessarily a pharmaceutical brand, but we are committed to helping people live and feel better. It really is about how you weave cannabis into everyday life?
We have a platform of very indulgent products, which is our chocolates ranging from truffles to bars. We also are building our non-chocolate portfolio to include other ways to enjoy cannabis in their daily life. And then to Glenn’s point, I think there’s ideas and technologies from the pharmaceutical area, there’s also things that have been in the food industry for years that provides sensations and experiences.
I think part of our goal is “how many of the five senses can we touch from people in creating product?” The feel of something in your mouth heating, cooling. Not just the psychoactive aspect of it, but the complete end-to-end experience.
These are all dynamics of us delivering the “live and the feel” piece of it. Then people can either use them from a lifestyle perspective for enjoyment, or a medical perspective. Our job is to provide consumers choices and options that provide those type of experiences.
Glenn: If you have a product that’s supposed to “reduce anxiety” why not start with the slight warming of the mouth? Something that feels calming long before the THC or CBD kicks in? Then have a flavor come up that just feels warm and comfortable. By combining all five senses, you have a product that really does something for your consumer.
Aaron: Thanks for that! What’s your process for creating a new product at Coda?
Lisa: Well, I think everybody talks about brainstorming sessions like innovation is something that just pops up. I think innovation has three legs to it. One is really customer-driven. So, we have to produce products that help our retailers make money, and that deliver really good experiences to consumers that we jointly serve.
The second piece of it is thinking about the discipline of innovation. So, when we make a product, what technologies do we bring to bear, can we scale them, and can we produce them at the right price point and delivery?
Then the last piece is the fun piece, trying to listen to what is and isn’t being said in the market to really try to be a solutions company.
We spend a lot of time listening and watching the market to figure out where we can anticipate things. We used to call it “problem detection” at Wrigley.
One project that Glen and I worked on was a mint that was designed really around adult usage in more professional situations. So, meaning the shape of the mint needs to be tucked in your cheeks so you couldn’t see it. And the packaging of it was something you could surreptitiously pop underneath the desk because we were designing it for people to use as really a business tool. You don’t think of mints as a business tool, but they really are, they give you more confidence with breath-freshening and you don’t necessarily want to hold that out with everybody else.
Some problems are about how to make a product more fun with our fruit. I can put pineapple jalapeño in my mouth and have a literal popping experience, which adds to my enjoyment of that experience.
The last piece is not to do too many products. One of the things that I think of in cannabis is that everybody’s still learning. It’s such a wide-open space, in some cases, that you also have to kind of pick what you do well. So, sticking close to our brand and what we stand for is also something that we’re trying to do. We’ve actually pulled in our SKUs recently and are trying to focus on a platform of indulgent experiences and of lifestyle products. We try not to do everything that we see out in the market and focus only on the things that we do well that solve problems for our consumers.
Glenn: From my perspective — I am not a big process person — I think the best way to do it is to say, “okay, we’ve got these products. We could look at technology, we could look at something else, but let’s just go scour what’s out there. And let’s get outside of our industry.” Look outside your own game, and see what you can use.
Discovering how to use these technologies in a gummy or chocolate as opposed to just drugs isn’t rocket science. My biggest avenue is looking outside and finding what you can apply as opposed to trying to reinvent everything.
Aaron: We’ve focused on the front end of innovation. Can you articulate on the back-end how that moves into product development, manufacturing and commercial launch?
Lisa: We have a new product pipeline with a Stage-Gate process where we will have a number of ideas and whittle them down on certain criteria.
Sometimes the ideas start with the technology and not the market. Glenn will find something and say, “Hey, this is going on, should we be thinking about this in cannabis?” It allows our each of our teams to come up with how they can make it work.
Then, as that product passes through the next stage-gate, we’re looking at the actual economics of the product, and how it fits relative to our other products all while we’re getting consumer input.
We get to that point in the process when we start trialing with consumers to help decide. And sometimes you get the best idea in the world, and then it’s not going to work so in some cases so you put it back in the pantry.
I never like to say that we don’t take an idea forward, even products that we may have taken off the market, we say “we freeze products, we don’t cut products!” because our goal is to have options. Our discipline is around a Stage-Gate process tied to our business goals and objectives. It’s also about playing around with concepts and seeing what materializes.
Glenn: There is this whole notion of a process, there’s a Stage-Gate, but before that, it’s a lot of playing around. What Lisa and I’ve recently worked on was making innovation a way of life so that every time you see something, you say something.
“We don’t think of innovation solely as the next flavor that’s going to be on the shelf.”We always gave people permission to play in the web.The reason brainstorming sessions don’t tend to work, is we expect people to become innovative in these next five hours.
So, if you think of innovation as a way of life, then it becomes what you do daily, and you look at things differently. I like to say when you’re driving home, go a different route, because you never know what you’re going to see. When you get out of that habitual mindset, you’ll think about your business differently, almost naturally. Innovation — this way of life — is one of our buzzwords.
Lisa: I think building that innovative culture is a responsibility, but also a challenge for a company like Coda. I mean, we’re not new. We’ve been around five, six years and we have some of the leading chocolate bars out there. We’re known for flavor systems.
Where our goal is to create a culture of innovation, you get these little pockets of creativity and innovation, and then it starts snowballing. You build on it, get people excited about it, and move it forward. That’s how everybody gets involved in innovation.
One of the goals of that pipeline process is to combine inspiration and discipline. But you don’t just want to be innovative in the next flavor. That isn’t doing enough for our consumers. We’ve educated them on the potential flavors could bring. But now we really want to be much more innovative across the board and see what kind of culture of innovation Coda can do.
We’re looking at the packaging, how we interact with retailers, how we use digital messaging to support our retailers and support our products. We don’t think of innovation solely as the next flavor that’s going to be on the shelf.
Aaron: From a supply chain perspective, how do you go about sourcing ingredients?
Lisa: We have some wonderful partners that have been with us at Coda. People that bring us chocolate from other parts of the earth.
We continue to keep building our ecosystem of partners. We look at different flavor houses and different food type researchers to be partners with us to broaden our ecosystem. It’s something that’s very much top of mind, even more so during COVID, because we’re feeling very fragile about our supply chains.
Glenn: Yeah, I think Lisa, that’s one thing you and I bring, not only to Coda, but I think to the cannabis industry, is the whole CPG discipline of how we look at suppliers and procurement. We need to go out there find some smaller flavor labs with incredibly creative folks.
I think the whole notion of expanding the supplier and vendor base, is pretty unique in this industry and that’s one of the strengths we bring to Coda.
Lisa: Our goal is to really create an ecosystem of different suppliers. I just think that that’s something other industries — you talked about pharmaceuticals earlier — have done. Cannabis is just starting to get there, but that’s where you get exponential opportunities.
We’re really looking at cross-functional and interdisciplinary teams with outside partners. Cannabis is at the stage now where I think it’s looking for more sophisticated technologies and new ways of deploying. We’re also really interested, as Glenn said, in some of the younger, more entrepreneurial firms that want to possibly expand their reach into cannabis as well.
Aaron: Okay, great. So my next question is can you give me an example of a challenge that you run into frequently? And this can be either a cannabis challenge or a business challenge?
Lisa: I think one of the challenges that cannabis faces in general is educating consumers about our market. One of the opportunities we have is to bring people into the market. We’re at the same time developing products for people who are in the cannabis space and are active users and have varying degrees of understanding of how they’re using the category in their daily lives.
We’re also trying to create products and education to invite people into the cannabis market. That’s a different challenge than if you’ve had an Oreo cookie, and people kind of understand cookies. They understand Oreos, and then they understand organic Oreos and all the other permutations of two chocolate cookies with a vanilla thing in between. Our goal is to expand the ability for people to access cannabis in their lives.
That is a very unique business problem. And it does represent a bit of a screen, are you going to do some of your products for more sophisticated users and others for less sophisticated users? Cannabis has consumers that have been taught essentially to think about milligrams; there’s one of the key components of choice. People will look at the product and flavor, and then they look at the milligrams and the price point.
That’s very unique to what we would find on CPG. You don’t necessarily look at dollars per milligram when you buy a cookie. So, if you’re trying to make a premium product with premium flavors, how do you say, “Well, yeah, there’s dollars per milligram, but this product has all these other technologies to create the warming or whatever.” “Innovation in products and new categories is critical to get the industry beyond common confections.”
So you kind of have a dual issue. You’re trying to get people educated on a new category and how they use it. But the education of the consumer in terms of the potential and the possibilities that they can access is going to be very important.
Aaron: What trends are you following in the industry?
Lisa: Beyond paying close attention to legalization progress across the country and monitoring how states are setting up their regulatory standards, we’re focused on which consumer demographics are incorporating cannabis into their wellness and self-care practices—and how Coda Signature products fit into their daily routines.
Glenn: For edibles, “fast acting” is probably beyond a trend and it will be interesting to see where this nets out. Consumers appear to be balking at the slightly higher price point for fast-acting gummies, but there may be a market for after-dinner dessert items. In other trends, use of minor cannabinoids and terpenes for specific benefits appears to be a solid consumer need, but this is going to require solid science to see if these products truly work. Innovation in products and new categories is critical to get the industry beyond common confections.
Aaron: Okay great! Lastly, what would you like to learn more about?
Lisa: We’re fascinated by the technological advances being made in the cannabis industry, and how those achievements may enrich the consumer experience moving forward. We’re also interested in the growing body of scientific research around how cannabis products can enhance people’s health and wellness.
Glenn: U.S. legalization and the constant changes in regulations require someone to distill the information and do a weekly report on changes.
Aaron: Thank you both! That concludes the interview!
Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.
This is the first article in a series where we interview leaders in the national infused products market. In this first piece, we talk with Keith Cich, co-founder of Sunderstorm, Inc. and the brand Kanha Gummies. Keith and his business partner, Cameron Clarke, started Kanha Gummies in 2015 after long careers outside of the cannabis industry. In 2015, they went all in and started the brand, which grew to be a major player and driving force in the California market.
Next week, we’ll sit down with Mike Hennesy, director of innovation at Wana Brands. Stay tuned for more!
Aaron Green: Keith, nice to meet you. Thank you for taking the time today. Tell me about how you got Sunderstorm off the ground and how you got involved in the company?
Keith Cich: Absolutely. So, my business partner, Cameron Clarke, is a lifelong friend. We met as undergraduates at Stanford University. I went on to work on Wall Street and did commercial real estate. Cameron has been a serial entrepreneur, from a much more technical side working in software. He was actually one of the first people to bring the Açai Berry to market and put it on the shelves of Whole Foods. So, he’s kind of the science and operations guy and I’m the finance and business guy. It’s been very synergistic.
By 2015 we had both traveled extensively and were big advocates of plant medicine and cannabis as another form of plant medicine. We also have a 15-year track record of going to Burning Man together. Really, explorations in consciousness and plant medicine were what tied us together. When cannabis came up as a business opportunity, we just kind of looked at each other and said, you know, we have a lot of business experience to bring to the table. We have a love of the plant and an appreciation for how it will impact society. So, we kind of went all in in 2015 under proposition D, and set up operations in Los Angeles at that time.
Aaron: How did you decide to get into infused products from the list of choices?
Keith: Yeah, we initially set up extraction, but we felt that cultivation and extraction would ultimately be commodities. However, if you could develop popular brands you could carve out valuable shelf space and have longevity.
We acquired a small gummy company in February 2016. In the beginning of it all – I call it “Cannabis 1.0.” At that time, a lot of the packaging was really oriented around men in their 20s focused on “high consumption.” The packaging was a lot of black and skull and crossbones, and it didn’t really represent who Cameron and I were as people. You know, we were a little bit older and well-traveled. And we just felt like when adult use would come in that brands would take a different pathway. So, we hired a branding person to come in and help with packaging.
We really focused on a product that would appeal to females because it was clear they were going to be 50% of the market – and packaging that would really appeal to older people, which we thought would come on board once the stigma of cannabis was reduced. And so, we really set up Kanha gummies, at that time in early 2016, to be this adult use product that would appeal to a wide spectrum, both medical users as well as adult users in the time that would come in the not too distant future.
Aaron: Yeah, that’s interesting. You talked about how you thought about differentiating in the early days getting off the ground. How do you think about differentiating today?
Keith: The two things that really set Sunderstorm apart from the crowd is automation and innovation. We were the first gummy company to invest hundreds of thousands in European confectionery equipment, which allowed us to scale our business, but more importantly, produce an identical product every time. The reason we hear people come back to Kanha gummies is that they have the same replicable experience every time, which is really the key to CPG companies. So, it’s really stringent automation that allowed us to develop precise dosing. In fact, in 2019, we won the award from CannaSafe, which is the largest lab in California, for the most accurately formulated edible. We dialed in manufacturing and that’s what set us apart in the early years.
My partner is really geared towards science and implementing new delivery systems for cannabinoid products. We were the first company to come out with a nano edible about a year ago in 2019 and we are still the leader in offering consumers nano-molecular delivery systems. What does that mean? One of the common problems with edibles is that it takes 45 minutes to an hour for it to kick in. We all know friends who take a cookie and double up on the cookie and end up having too big of an experience. Rapid onset curbs that risk. Our nano gummy kicks in about 15 to 20 minutes, and it’s got just this really nice journey to it. We’ve separated the audience between the people that have our classic gummies, which takes longer to kick in, maybe a little bit stronger and the nano technology, which has a really fast onset, and really kind of a discrete journey. We stay ahead of the competition today, because of the nanotechnology that we’ve implemented in gummies.
As I always say, it’s not about how much vitamin C you take – it’s more about how much vitamin C gets in your blood stream. And it’s the same with cannabis, right? It’s how much THC and CBD or other molecules get in your system. So it’s about really having the highest bioavailability and the best performing products. And that’s what our customers have come to believe about Sunderstorm.
Aaron: You’ve talked about a couple new products from Kanha. At a high level, can you talk about your process for ideating and creating a new product?
Keith: Sure. I could use an example of a product that we’ve just kind of relaunched. It’s called the Tranquility gummy and it’s targeted for sleep. What we’ve discovered is there’s a whole host of medical reasons why people take cannabis – as well as the adults who take cannabis for entertainment – but sleep is a major issue for Americans of all ages. It’s surprising. It impacts 20 year olds and it impacts 60 year olds.
Part of the process of coming up with a product is trying to figure out what’s the need in the marketplace. So in this case, we really looked and said, hey, let’s target sleep and see if we can experiment and come up with a product. Our first round of Tranquility had a mix of CBD and THC in it because both of those are valuable for sleep. CBD is a chill-pill that kind of makes you calm so you can go to sleep. THC is often something that helps people stay asleep.
“We go through many iterations of a product before it actually hits the marketplace.”In that product, we also added 5-HTP, which is a serotonin booster, which once again, people take when they have anxiety or stress. So it’s kind of a stress reliever, and it helps you be calm, which again, I think a lot of the problems for people who have an issue with going to sleep, it’s having so much on their mind that they can’t stop the monkey mind to actually enter into sleep to begin with.
We also added just a small amount, one milligram, of melatonin. We know that Melatonin is a sleep aid, but you don’t want to take so much melatonin that your body stops producing melatonin because you’re taking the supplements. So at the end of the day, you want to just encourage and coax your body into healing and not overkill it with a pharmaceutical. Right?
So that was our first generation and we worked with that but my partner looks through a lot of research that’s occurring on different cannabinoid particles, and it became clear that CBN, which is kind of a new cannabinoid that’s hitting the press, actually had really strong properties for sedation and keeping people asleep. So, we added the largest dose of CBN in any gummy, and then re-launched that product a month or two ago. And we’re getting incredible feedback from shops that they’re selling out. It’s awesome, because people are actually taking the gummy and having the effect of falling asleep and staying asleep.
It’s the combination of the different factors. No one factor is so overwhelming like a pharmaceutical drug. But it’s the combination of the different factors together that make for a great product. And we fortunately have dozens of people in our company who are happy to do R&D for our new products. We also have some people outside the company that are consultants and experts as well. We go through many iterations of a product before it actually hits the marketplace. And that’s the second thing: it’s a lot of rigorous R&D testing of products before we launch it for the end consumer.
Aaron: Yeah, so if we can touch on that, can you tell me about your experience with your most recent product launch? Whether it’s the NANO5 or the Tranquility gummies? How did you think about preparing the market for the launch? Preparing your team for the launch? And then how did it go?
Keith: I’ll talk about our sublingual line called NANO5. Again, it’s a nano product where every molecule of CBD or THC is wrapped in a molecule of fatty lipids, so that when you spray it on your tongue, it tricks your body into absorbing it directly into the bloodstream and doesn’t actually go through the digestive tract and the liver. The bioavailability of these sublinguals is high and 70 to 80% of the cannabinoids actually get into your bloodstream.
We’ve done blood sampling tests versus your standard tincture. Your standard tincture is just MCT oil and cannabis, it’s pretty crude, kind of caveman-ish, quite frankly, when compared to the delivery of pharmaceuticals are today. NANO5 is a much more advanced delivery system.“We’re here to really try to educate people the best that we can.”
Now we have the product… right? This is a sophisticated product that’s challenging for bud tenders to explain when consumers come in with their medical needs. We had to create a lot of written brochures about how the product works, what the dosages are and that sort of stuff. Then our sales people go in and actually train the shops. They’ll pull bud tenders out and do training sessions and talk about NANO5, what makes it different from other tinctures, what medical conditions is it good for, etc. It’s kind of old fashioned, in-store training.
Then we finally have implemented a new piece, which is digital bud tender and consumer training. We are leveraging a platform for bud tender training, we talk with the shop, talk about the product and if the shop manager agrees we send a link out to all the bud tenders who take a quiz. The bud tenders get educated on an online platform, take a quiz, and then when they pass the quiz, they get a licensed sample of the product to try themselves so they have firsthand experience.
What we find in many shops is that the consumer is still not that educated about cannabis, particularly for medical uses, and particularly what I call the “new consumer” that hadn’t used cannabis in their lives, because it had such a high stigma to it and now with the reduction of the stigma it means a 40 or 50 year old woman might go into a store to find something to help with pain, or help with anxiety. Now, the bud tender can use the training that they’ve learned on NANO5, and understand that this could be a good product for them, and then talk about it intelligently and give some materials to the consumer before they walk away.
It can be intimidating for consumers to go into a shop, you know, it’s a new experience. It’s like going to the doctor’s office, you don’t always hear what they say, because you’re kind of nervous. So giving them the written materials, and even a test to follow up on online really allows for a form of education that is in tune with the user needing to learn at their own speed and really to just take away what’s important for them.
Aaron: Did I hear you correctly? The user – the end consumer – can also do a quiz?
Keith: Yes. Sunderstorm is about science and education. There’s a lot of assumptions in the marketplace that may not be correct. So, we’re here to really try to educate people the best that we can. And we really believe the rest of the world acts in a digital manner for education. In some ways, cannabis is a little bit behind the times because it’s difficult to advertise on Facebook and traditional venues. So we have one hand tied behind our back when we’re dealing with the digital world. But we at Sunderstorm are big believers that digital will be the way that cannabis consumers learn about brands, learn about products and learn about cannabinoids, and we want to be at the forefront of that education process.
Aaron: OK, we talked about some challenges. One of the challenges I hear a lot is about sourcing ingredients for infused products. How do you go about sourcing ingredients in your infused product lines?
Keith: Our primary ingredient that we source is distillate. And starting back in prop 215 days, we have a zero parts per billion policy on pesticides. What we discovered is before lab testing and licensure came in place is that 80 to 90% of the oil out there actually had pesticide levels that were way beyond safe. It really took licensing and the implementation of lab testing to change that regime. We now buy distillate from third party extractors and we have a handful of really big, really solid players onboard who provide that oil to us. The key is that if there’s any detectable trace of pesticides, we send it back and they replace it with a not-detect batch. So for us, that’s really the key to the whole supply chain: starting with oil that’s clean and really good quality.“Delivering the product in a compliant manner has been one of our logistical challenges, but one that I think we’ve done quite well at day in and day out.”
Fortunately, we’re one of the bigger brands in the industry so we have a little clout to make sure that the people that give us our oil are giving us their top shelf, and not their bottom shelf. We then have also made it a point to use only natural flavoring and natural coloring in our gummies. Believe it or not some of the red coloring actually is derived from beets and beet juice. We use spirulina as a source for our blue green colors. All of the gummies that we produce, not only have no pesticides, but they have no artificial flavors and no artificial coloring, which is of course standard in mainstream gummies that you buy at CVS or the local drugstore. So we really feel like we want to put out a healthy product and Cameron and I always look at each other, like, ‘we wouldn’t sell a product that we wouldn’t put into our own bodies.” And we’re very health conscious, you know, buying organic produce and not wanting pesticides to be inside us.
Aaron: Can you give me an example of a challenge you run into frequently, and this could be a business challenge, a marketing challenge, financials… something that you run into frequently?
Keith: Yeah, so we not only manufacture our products in California, but we also do self-distribution to over 500 retailers, meaning in store dispensaries and delivery services throughout California. With these 500 customers, we have two distribution points, one in LA and one in the Bay Area where I’m located. It’s an amazing challenge logistically. Not only are we running a manufacturing operation that requires precision – and it’s highly regulated – but we run a distribution company that’s highly regulated. For us the challenge is how do we efficiently deliver product to the Oregon border when we’re manufacturing in LA? We’ve had to spend a lot of time developing protocols for logistics and distribution to be able to basically meet demand throughout the state. And we’ve been growing like crazy. We add 10 new shops probably every week.
Delivering the product in a compliant manner has been one of our logistical challenges, but one that I think we’ve done quite well at day in and day out.
Aaron: What kind of trends are you looking at in the industry? And what keeps you excited?
Keith: I think COVID-19 has touched every aspect of our lives and it is impacting how we consume cannabis. Because it’s a respiratory disease, I think people have been wanting to shy away from smoking flower or vaping to keep their lungs healthy as a precaution in case they get it. So edibles have been kind of a natural choice for that. As well as the simple act of sharing something; sharing a joint raises a lot of safety risks, especially during the pandemic. It’s a lot easier to share a single gummy out of a bag safely.
Secondly, what I’ve noticed is that parents have their kids at home and yet they still want to consume cannabis as they did before. Edibles have been big because of discretion. So mom or dad can pop a gummy and have a spritzer before dinner and enjoy the night and my theory is happy parents make happy kids. So discretion has been critical.
Then I think there’s a whole round of new entrants that I mentioned before. These are people that maybe smoked weed in college or high school and haven’t touched it for 20 years and now that the stigma has been reduced, they’re coming back to the marketplace and wanting to explore. They may try a vape product, but very few of them want to smoke, as the country is generally pretty anti-smoking.
I think edibles and gummies have been a way for new cannabis consumers, particularly those who are older, to come and enjoy the positive effects, the medical effects and the social lubricant that cannabis offers, while being safe and discreet at the same time. I think COVID has definitely changed the way that that people think about consuming cannabis.
Aaron: Okay, awesome! Lastly, what would you like to learn more about? What are you interested in?
Keith: I have a degree in philosophy and religion. I’m a big fan of the evolution of consciousness. I think that is the container of the story through which we view human civilization and I honestly think we’re at a turning point for how humans in Western society view plant medicine.
I think cannabis is just the first to come along and be legalized. They’ve been doing phase II and III clinical trials on psilocybin and end of life anxiety. People, particularly war veterans, are using ecstasy or MDMA for depression.
What we’re discovering is that what we think we know about the mind is only the tip of the iceberg on how the mind works. I’m interested in exploring how these plant medicines impact individually with our psyche. Secondly, what happens to society when we reach a tipping point and a majority or at least some significant portion are taking these plants and medicines on a regular basis? It opens us up to a whole new perspective on ourselves, on society and on the universe that we live in. So I read a lot in those fields. And that’s what really excites me.
Aaron: Great. So that’s the end of the interview. Thank you for that.
Cannabis extraction and manufacturing is big business in California with companies expanding brands into additional states as they grow. This is the fifth and final article in a series where we interview leaders in the California extraction and manufacturing industry from some of the biggest and most well-known brands.
In this week’s article, we talk with Kristen Suchanec, VP of Production at Island. Kristen converted her experience in traditional consumer packaged goods to cannabis to help create a brand that is sought after by many. The interview with Kristen was conducted on August 21, 2020.
Aaron Green: Good afternoon Kristen, I am glad we were able to put this interview together. I know you have been very busy!
Kristen Suchanec: I’m so sorry this took so long to actually work! Thank you for bearing with me. I’m happy we are able to talk.
Aaron: Great! I like to start off the conversation with a question that helps our readers get to know you a little better. So, Kristen can you tell me how you got involved at Island?
Kristen: My background is in manufacturing and planning for consumer packaged goods. I had a friend of a friend and we were just at a happy hour and I asked what he was up to. He was actually our VP of Finance at Island and he handed me a box of pre-rolled joints. They were our Island Minis and I thought it was a great customer experience. I loved the brand and packaging which made it a consumer product versus, you know, this was a few years back where cannabis wasn’t necessarily commoditized or branded. I got really excited about that because I feel like cannabis should be traditional CPG and it should appeal to different people and it should have different brands that appeal to those different groups. So I literally just started a conversation. His brother is our founder and CEO and they needed someone to run production so that was my background and it all kind of lined up and I ended up being employee number five at Island!
Aaron: Wow, employee number five – awesome! OK, great. That is some nice background about how you got involved at the company. The next questions get into product development and manufacturing. The first question is: what’s your decision process for starting a new product?
Kristen: Yea, we are right now owning the lane between cultivation and distribution. So, getting those raw materials for whether it be concentrates or flower and then converting them into that final packaging for everything. So that is what we focus on and spend all of our time with automation and trying to make that process as efficient as possible.
When we’re looking at a new product we’re not necessarily creating a new extraction, we are really looking at the market and the end consumer and what people want. At Island we’ve really focused on vape, pre-roll and packaged flower. Those are the three categories we are working on right now. We are expanding and looking to move more towards vape and live resins and specialty concentrated products that we haven’t really had in our portfolio before. What we would like to do is make sure we have the capability to manufacture that and then take a look at where we think the market is going. We are trying to go in the flower, pre-roll and vape because that is where we spent so much of our time getting pieces of automation so not everything we are bringing in house is manual.
Aaron: Now when you say the capability to manufacture that are you talking about from a packaging perspective or…?
Kristen: Yes, so we won’t do any extraction on site. It’s getting distillate, shatter and flower and then we take that and convert that either into pre-rolled joint, a package of flower or any other final product. So, we are looking at automating that packaging piece.
Aaron: Got it. OK, so the next question — and I think you kind of touched on this as well — are you involved in manufacturing to the extent that you are manufacturing the packaging?
Kristen: Yes absolutely. My whole team’s manufacturing is based out of Oakland. That’s where we do all the conversion of products. I oversee that entire team and have been really involved in a lot of the equipment that we have sourced and iterations that we’ve gone through to make sure that we’re able to automate as much as possible. We’ve really focused on the issue of weighing the material. For our flower line everything is weighed and put into a jar, capped, sealed and labeled for it to come off our lines. We don’t have anyone in packing or anything like that. Our pre-rolls manufacturing is an automated machine where it actually weighs the flower before going into the cone so we’re not having to weigh after the fact and take into account the weight of the cone because that’s so variable so we know that the customer is getting consistency. Then for the vapes, it’ssame thing – the volumetric doses everything.
I have to give my credit to everyone on the floor who is doing the day to day, they find so many new solutions since they are the ones that are hands on. I am really involved in what new equipment we need, what problems we are looking to solve and what’s causing our bottlenecks so we can continue to improve our process week over week and year over year.
Aaron: We’ll dig into some of those problems in a bit. What is your process for not just starting new product but for developing a new product?
Kristen: Yeah, absolutely. So, I think it’s really interesting to see where the market is going. What’s selling really well and especially over the past year pre rolls have been a huge growth platform for us. And especially now, we’ve seen some changes because of COVID as well. We have single joints. But then we have our Minis, which I’ve mentioned before, which are half gram joints. We’re seeing sales on those actually increased because I think people are sharing joints as people want individual things because of this pandemic.
When we go through this process, we’re really – again – we’re so focused on what the consumer wants, and what we think is going to add to our portfolio. Then when marketing and our product team comes to me, we really focus on our machinery, what we can do with it currently, and if we would need something additional. So,we’re excited about expanding into 510s right now. We’re looking at how we can automate the process of capping – we can fill right now, but not cap. And then we also take a look at packaging.
I think it’s a little different than creating like a whole new product, extraction or anything like that, but we were looking at more sustainable options for packaging for child resistance because we’re trying to move away from barrier bags as much as possible. We’re looking at, okay, how many stickers do we need to put on there? What is the labor time going into each piece of product? And again, how are we eventually going to get some consistency across product lines, etc.
So, it’s really taking all three of those components, making sure we’re getting out the customer that feels like they want. I’m having it either fit into our process or again, then go through and look at what automations meanand automation equipment investment you want to make for long term future investments.
Aaron: Are you developing new products internally, or are you relying on outside manufacturers for that?
Kristen: Not everything we do is internal. We have a big network of, you know, cultivators and extractors we work with, but we’re in the midst of getting our own cultivation and manufacturing in house by working with other companies. So with that we’re doing everything.
Aaron: Do you ever bring in external product development consultants for helping out with your processes?
Kristen: No, we don’t bring in consultants. But we have brought in another brand into our fold via a brand called Neutron Genetics. That is part of our overall portfolio. We work very closely with the founder because he has a lot of trade secrets, a lot of his own processes to make sure you’re getting the best product for that specific brand.
Aaron: In your product development, what does getting stuck look like to you?
Kristen: That’s a good question. I think one of the biggest challenges is working with the plant itself, because it’s not consistent and it’s not homogenous. You could get the same strain from the same cultivator, but it’ll be a different batch. It might be a little stickier or a little larger, etc. When you’re looking at traditional manufacturing and automation, you want consistency, homogenized liquids, same viscosity every time, and we don’t have that because the plant itself is natural and is going to have all these different expressions depending on the batch and how it was grown and how it was trimmed even.“I think it’s really the proper equipment, the proper training and then, again, continuing to evolve as a team.”
So, getting stuck means finding an off-the-shelf solution that might work for, you know, nuts and bolts or some kind of food production and then you’re going to have to convert it to actually work with the cannabis plant. So that’s what makes it so challenging, but also really exciting. In the bud, humidity and air can really throw off a manufacturing process which is really different than just doing beverages for example.
Getting stuck means really having to work with the plant concentrates specifically if you think about just the nature of those whether it be shatter, distillate or very sticky product. So again, working with machinery isn’t always what goes hand in hand. So, getting stuck is dealing with all those different formats and inconsistency using the same product day after day.
Aaron: It sounds like consistency is kind of a main topic here?
Kristen: Yeah, I think it depends on what product format we have. For example, about a year ago, we launched infused pre-rolls for Neutron where we’re putting flower, kief and shatter into a joint. So that’s going to perform differently on a piece of machinery than just straight flower.
I think it all depends on the product. Usually it happens when it’s in that machine, you’re trying to get a good flow and a good consistency. You want to have time studies, you know how long it takes to make each batch. But if a certain flower mix is performing differently, it’s getting the settings of the machine dialed, right? It’s also properly training personnel so people know how to react when things get going. Sometimes things get physically stuck in the machine as well, so to be able to react on that.
I think it’s really the proper equipment, the proper training and then, again, continuing to evolve as a team. So for our pre-roll machine, we are now on our third version of it, just because we kept running into the same roadblocks and I’m hoping that continues to evolve and we just continue to get better equipment year after year.
Aaron: I see, do you ever hire outside consultants when you do get stuck?
Kristen: We’ve worked closely with vendors. I will say that we’re not a machine shop or engineering firm. So we’re not the ones creating a lot of what we use on the floor. We’ve partnered with various vendors, which has been helpful, but we haven’t used external consultants.“When you see the huge potential and then see how much is taken out from illegal activity right now, it is frustrating to see.”
Aaron: Okay, now imagine that you have a magic wand and somebody can come in and help you. What does your magic helper look like?
Kristen: I could probably make a really long list if I’m focusing on just my manufacturing and everything! I think the next thing which we’re already thinking about that magic wand is how to get a perfectly rolled joint without having so much manual human touch to it. And like I said, we’ve really attached to that weighing problem. And we’ve seen solutions out there that you know, claim to twist and have that “perfect roll” and you don’t need to even touch it. But I think the biggest challenge there is it depends how well it’s packed. You know, you don’t want it too tight. You don’t want it too loose for that customer experience. So getting that quality, if I could wave a magic wand where I’m putting in, you know, paper on one side and out comes perfectly rolled joints, that would be my magic wand for sure. Okay, I think there’s a lot of solutions out there but to get that quality and that consumer experience that we want, I haven’t seen working practice yet.
Aaron: Okay, What’s the what’s the most frustrating thing you’re going through with the business right now?
Kristen: Again, that could be a long list! I think from a more macro-level, it’s definitely the competition with the illicit market and just how there’s not enough outlets for legal cannabis right now in the state of California. When you see the huge potential and then see how much is taken out from illegal activity right now, it is frustrating to see. We’re going to get this growth and projection of the right number of dispensary licenses and things like that are definitely a huge frustration as well as with the tax structure right now because it’s obviously contributing to people going to the illicit market.
Aaron: So what are you following in the market? And what do you want to learn more about?
Kristen: Yeah, I think that’s a great question. I think the thing I’m most excited about for the larger population isjust more research to come out about the actual attributes of the plant, or how different cannabinoids react together and can have different effects. How terpenes can affect the high, how things can be used and distantly, recreationally, etc. And really, hopefully evolve and move away from strictly some sativa, hybrid,indica classifications, and really be able to educate the consumer more about the plant so people can have a more a personal relationship to understand how cannabinoids or specific terpenes are going to give them a different effect. And again, I think that’s so interesting because it could be used for therapeutic reasons that people do consume cannabis or it could just make it a better experience for people who want to take this as an escape or a way to relax and everything. So I’m really excited because more research is going to be able to get done and we can really learn more about how all of these things interact in the body and then people can take it to a whole new experience and be more educated all around.
Aaron: Alright that’s the end of the interview Kristen! Nice chatting and meeting you!
Cannabis extraction and manufacturing is big business in California with companies expanding brands into additional states as they grow. This is the fourth article in a series where we interview leaders in the California extraction and manufacturing industry from some of the biggest and most well-known brands.
In this week’s article we talk with Michael Schimelpfenig, head of R&D and BHO extraction manager at Bear Extraction House. Michael worked in the cannabis space for about five years prior to landing his role at Bear, having spent several years in the hills of Humboldt County. The interview with Michael was conducted on August 3, 2020.
In next week’s piece, we sit down with Kristen Suchanec, vice president of Production at Island. Stay tuned for more!
Aaron Green: Good morning Michael and thank you for taking the time to chat with me today!
Michael Schimelpfenig: Thanks, excited to be here!
Aaron: I like to start off the conversation with a question that helps our readers get to know you a little better. So, Michael can you tell me how you got involved at Bear Extraction House?
Michael: You know, I actually landed my role at Bear through a job search on LinkedIn. I had been working in the traditional market for five years and was getting tired of the irregular paychecks and general uncertainty of working in that market. You know, too many helicopter buzzes and all that. I felt like the risk vs reward just wasn’t there. I like Northern California and knew I wanted to find something up in Humboldt County where I had been fortunate to get experience out in the hills. After I applied on LinkedIn, I was contacted in twenty-four hours. I had an interview twenty-four hours after that and the next day I had a job! It’s been a big change going to a legal company. The possibilities are lightyears beyond what you can do in the traditional market. Lots of resources and equipment available that just aren’t there in the traditional market.
Aaron: Fascinating! I spent a week up on Humboldt last year and it is beautiful up there. The next questions will be focused on product development and manufacturing. What is your decision process for starting a new product?
Michael: We get feedback from a lot of different places. Sometimes a new product idea is coming from our CEO, Per. He comes to me with new ideas and asks if we can do something. Often it will start with a general question. Is it possible with the given capabilities? Is it scalable? Some of our new product ideas are based on market input and then others are based on employee input. Sometimes we have pre-existing ideas and just need to sit down to formalize them. Here at Bear we have the capability of making a lot from a little input.
We’re always playing with ideas. We have lively R&D meetings each week where we throw ideas around. Take byproducts from a product development run for example. Maybe it’s not a byproduct, but maybe a separate new product altogether! Sometimes we’ll start off wanting to make something and, in the process, create something unexpected that we are then able to turn into a product. Creating new products is just as important as improving optimizations. Ideas come from all over the place.
We focus these ideas through the R&D committee. Common questions include: How do we develop the product? What are the costs? Is it marketable? We have to view things from an economic standpoint and we won’t proceed until we can figure out what the product can be and what we can make money from. Our R&D committee is made up of our COO, Jeff, our lead extractor, our oven room manager and our post-production manager who focuses on product separation. When we kick a new project off It all takes lots of scheduling and coordination.
Aaron: Are you developing new products internally?
Michael: We do 100% in-house product development and manufacturing. We are formalizing and creating a more focused approach to R&D and are bringing in some academics now. They are young minds with backgrounds in organic chemistry and thermodynamics. This is important because it’s the science behind the process that helps to generate the products. We believe the added talent should help to provide some grounding to the R&D. Before we made a lot of products by accident. The ultimate goal is uniform manufacturing and that requires an understanding of molecular processes.
Aaron: Answer the next question however you like. What does being stuck look like for you?“If a product isn’t behaving the way we expect, we will do testing to determine cannabinoid and terpene levels to gain better understanding.”
Michael: Well, there are a couple ways to get stuck. Sometimes you can get stuck with a limited product portfolio. A year and a half ago all we made was live resin. Now we have different levels of live resin and six different vape carts. If you are not changing and developing new products, you are stuck.
When the web of production stops going that is definitely what I consider getting stuck. You can get stuck if sourcing material is difficult to find or cost prohibitive. We will pivot and adjust manufacturing material if that happens. We are also exploring best avenues for sourcing high quality trim and working with farmers to specifically grow strains and exotic genetics. But overall, getting stuck happens. Being stuck, on the other hand, is a lack of creativity.
Aaron: If you get stuck is it usually the same place? Or is it different each time?
Michael: We have redundancies for equipment and components. If we are getting stuck in the same place it is usually due to a lack of source material. Sometimes we get material that degrades prior to extraction. It’s a matter of contacting supplier to coordinate with them on the best approach forward. If a product isn’t behaving the way we expect, we will do testing to determine cannabinoid and terpene levels to gain better understanding. In the end, sometimes we just have to pivot to other products with things we have.
Aaron: Thanks for that. Now, imagine you have a magic wand that can take care of your issues. What does your magic helper look like?
Michael: My magic helper would be someone to help with reporting. Someone that can take care of METRC indexing and preparing final R&D reports. Like a magic data processor. Someone to handle the minutiae.
Aaron: What’s most frustrating thing you are going through with the business?
Michael: There’s never enough time! We continue to manufacture at full capacity all the time. With that demanding of a schedule it can be difficult to manage time between day-to-day processes and being able to look at bigger picture.
Aaron: Now for our final question: What are you following in the market and what do you want to learn about?
Michael: I’m following the guys out there that are heavy into crystallization. There are some huge THCA diamonds coming from East Coast Gold. I would like to know what their solution is. What is their magic liquid and process? I am a big fan of diamond growth. You can grow extremely pure isolates that way. We grow our own diamonds and have had them tested greater than 99.99% THCA. I think high level purity THCA from diamonds is preferred versus distillate. There is a difference in the smoke between them too. Having a process for making large quantities of diamonds would open us up to sticking our foot in edibles and topicals too. There is control that comes with having a purity level like that. Dosage is difficult without it. I am also interested in improving extract purity and isolating terpenes. I like solvent-less products. It means it came from a high-quality source. I would be just as happy smoking good flower as concentrate derived from the same flower.
Aaron: Alright that concludes our interview! Thank you again for the time today, Michael!
Cannabis extraction and manufacturing is big business in California with companies expanding brands into additional states as they grow. This is the first article in a series where we interview leaders in the California extraction and manufacturing industry from some of the biggest and most well-known brands.
In this week’s article we talk with George Sadler, President and Co-founder of House of Platinum. George and his son Cody started their cannabis journey in 2010 when they sold their dirt bikes and set up a 10×10 garage. They have since built the business into a $70 million dollar cannabis empire across California, Michigan and now Oklahoma. The interview with George was conducted on July 31, 2020.
Next week, we’ll interview Matthew Elmes, Director of Product Development at Cannacraft. Stay tuned for more!
Aaron Green: First off, George, congratulations on your recent announcement on the LOI from Red White & Bloom!
George Sadler: Thanks! The deal isn’t done yet but we’re looking at a sixty-five-million-dollar deal. Cody and I will be staying on as officers to oversee growth as we expand into new markets.
Aaron: That’s great news! I hope it all works out well for you and best of luck closing the deal. Now on to the interview questions we had planned. So first off, how did you get involved at House of Platinum?
George: My son Cody and I wanted to do extraction and have a vape company. Five or six years ago we climbed on a plane to China to speak with manufacturers. We started off with extraction equipment in a small room with a table top machine. After a time, we took year and a half off to get our licensing and do our buildout. We opened up again two years ago in June. At the time, China was the main resource for packaging, and everything really. We got hardware from another company and had our Chinese partners rework the hardware to address some of the issues we had. Cody and I spent a week in Shenzhen where we met with our Chinese partners. They first did cartridges, packaging and batteries.
Aaron: Thanks for that, George. The next questions will focus on product development and manufacturing. What is your decision process for starting a new product?
George: In the beginning, Cody and I would both be a part of new product development from beginning to end. Cody has taken lead now on the beginning phases so our new product development really starts with him. We collectively come up with the concept. Cody does the market research. The concept then goes to our design team for visuals and to do the artwork- this usually takes some time. After we are satisfied with the branding, we start the manufacturing process. We do everything start to finish and can go from design to package in less than two weeks. The only thing we still manufacture in China is hardware these days, so cartridges and batteries.
Aaron: Are you personally involved in manufacturing? Tell me about your process
George: Cody and I are both involved in manufacturing. In California, we have about a hundred employees at our facility. In Michigan we have another hundred, and Oklahoma has about thirty. In Michigan, we do carts only right now and are getting ready to launch chocolates and gummies. Oklahoma is also getting ready to do edibles and gummies.
Aaron: What is your process for developing new products? George: In manufacturing, when we start a new line of edibles, we’ll first do a full test batch of products before committing to full-scale manufacturing. We start small at first then scale into larger batches. If everything looks good, we’ll decide whether or not to invest in larger equipment.
Aaron: Are you developing new products internally?
George: Our California and Michigan production is done 100% in-house. In Oklahoma we have a licensing deal with a manufacturing partner.
Aaron: Do you ever bring in external product development consultants?
George: No. We do all of our product development internally.
Aaron: In product development or manufacturing, what does being stuck look like for you?
George: That depends on what phase of the process we’re talking about. One challenge is getting the recipe dialed and then figuring out how to move into large scale. Take chocolate for example: going from a one spout pour on chocolate to a three-spout pour. That process can take a while to figure out. Any time you are trying to move forward in your manufacturing process, if there isn’t existing equipment available you may need to purchase it. There isn’t a lot of information out there to gauge on the cannabis side what is relevant.
Aaron: How about source materials for your products?
George: We pride ourselves on doing a deep dive on all of our suppliers. That includes packaging, chocolate, sugar, and flower. The advantage of longevity in this industry, we have keen radar on those doing premium work.
Aaron: What’s the most frustrating thing you are going through with the business?
George: I think a majority of people would agree that there’s lack of understanding of what’s happening with licensing. Legacy market products and unlicensed stores are frustrating. Inconsistency on testing is also frustrating. The states aren’t really doing anything to correct inconsistent testing. But banking is the number one industry pain point. We have a handle on the rest. Banking we don’t have any help.
Aaron: Feel free to answer the next question however you like. Imagine you could have someone come in and wave a magic wand to solve your problems. What does your magic helper look like?
George: Hah! Not sure what a magic helper would look like. Distribution is our biggest headache. Distribution is a different animal that is outside cannabis product development. We do all of our distribution in-house and it can be a pain.
Aaron: Now for my final question: What are you following in the market and what do you want to learn about?
George: We’re semi-new in the CBD space. Anything up and coming is something we are looking at. We’re focused on going big and multi-state. Arizona is the next state we are looking at. Nevada is after that. The partnership with Red White and Bloom is going to grow the brand into other states with them. Growth continues in that direction. Recently we’ve been going back to cultivation and doing cultivation deals. We started as cultivators and a lot has changed in the past several years. We are trying to pick up new knowledge.
Aaron: Well, thanks for that George, this is all awesome feedback for the industry. That concludes the interview! Thanks so much for your time and congrats again on your recent announcement with Red White & Bloom.
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